Groupe ADP publishes new proposals

Lauren Eldershaw
By Lauren Eldershaw April 8, 2019 12:23

Groupe ADP publishes new proposals

Groupe ADP has published detailed proposals for 2021-2025 Economic Regulation Agreement, for the development of Parisian platforms. This document is available at the following address: https://www.parisaeroport.fr/en/group/finance/.

The five-year Economic Regulation Agreement, concluded with the State, constitutes the basic regulatory framework for Parisian airports, precising the nature and the amount of planned investments, the expected quality service level and the airport fees increase for the next five years.

The proposed investment plan, according to Groupe ADP, will not only meet the needs of the 2021-2025 period but also launch structuring operations in favour of the long-term development of the three Parisian platforms. For this, Groupe ADP proposes to carry out an investment plan on the regulated scope of €6 billion euros the 2021-2025 period (the Economic Regulation Agreement for the 2016-2020 period retained an investment plan of €3 billion).

This five-year investment plan will allow the airports to cope with growing passenger traffic, estimated to increase by an average of 2.6% over the 2021-2025 period (3.5% for international traffic), by optimizing existing infrastructures and pursuing a demanding maintenance policy. It will also allow the reconsideration of the overall operation of the Parisian platforms by devoting resources to the redesign of road access, by launching the construction of terminal 4 at Paris-Charles de Gaulle and reconfiguring the Western part of the Paris-Orly platform. It also devotes resources to digitalizing and smoothing passenger itinerary and improving the quality of service in the terminals. This proposal forecasts consistent investments with the ambition of carbon neutrality of Groupe ADP’s Parisian airports in 2030.

Groupe ADP says that efficiencies have allowed the company to maintain its tariffs policy, which it describes as “moderate and stable”. Annual increase in tariffs are equal to inflation increased by 1.35 point on average for the 2021-2025 period (vs. inflation +1% over the 2016-2020 period). Groupe ADP proposes to maintain the main elements of the 2016-2020 tariff structure, while simplifying it (integration of certain ancillary fees with the main fees) and introducing a tariff modulation based on Nox emissions and increasing tariff modulation relating to noise.

Over the 2016-2020 period, Groupe ADP states that it should achieve an average profitability of the perimeter of 5.4% (with a 2020 profitability objective between 5.6% and 5.8%). Regarding the 2021-2025 Economic Regulation Contract, Groupe ADP suggests to retain a weighted average cost of capital related to regulated activities, estimated using objective market data and parameters from companies operating comparable activities, at 5.6% in nominal value after taxes. In accordance with the principle of fair return on capital employed, the Group aims at an average profitability of 5.6% over this period.

Augustin de Romanet, Chairman and CEO of Groupe ADP, stated: “By conciliating short, medium and long term, and succeeding in making significant investments while limiting the tariffs increase and allowing a fair return on capital employed, the company’s proposal for the next economic regulation agreement 2021-2025 takes into account all stakeholders needs. It shows the strength of Groupe ADP’s industrial and financial model, to face the many challenges it faces, and its ability to invest and grow in Paris.”

Lauren Eldershaw
By Lauren Eldershaw April 8, 2019 12:23